29 September 2009 19:38 [Source: ICIS news]
By George Martin
HOUSTON (ICIS news)--The prospects for packaging in the US expandable polystyrene (EPS) industry remained grim with the economy still in the doldrums, high unemployment, consumer fears and low demand, a plastics transformer said on Tuesday.
Talk of another "black Christmas" at the retail level has begun, and the usual inventory build at this time for packaged goods was weak, the transformer added.
Construction demand in some parts of the country appeared to be stronger, but new business was still being stymied by banks still not lending as before, the source said.
Government stimulus spending was underway, but the bulk of those projects will hit in 2010, according to news reports. In the meantime, the prospects for the fourth quarter of 2009 were dim, the source said.
Transformer companies reported that business ranged from flat to off by 40% relative to the low levels seen last year. Some estimated that business was down to about one half of last year.
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The problem for all resin suppliers was a lack of forward demand by the transformers. Until demand picks up, attempts to raise prices would be met with resistance or ignored by the transformers, another transformer said.
Another possibility is that October prices would be flat because the increases announced for September did not take hold with many buyers.
The initial announcement called for a 5 cent/lb ($110/tonne, €75/tonne) increase in September that was later reduced to 3 cents/lb by all producers. However, many transformers had yet to see any increase.
Many decided early on not to buy during September. The weak demand has allowed them to stretch their resin stocks while waiting for lower prices ahead.
US producers acknowledged that volumes had suffered in September and they were preparing for a tough fourth quarter. “If all we lose in October is the September gains, that will be a blessing,” a producer said.
EPS prices in the
North American producers include NOVA Chemicals, Flint-Hill Resources, StyroChem, Nexkemia, BASF, Polioles and Polidesa, with the last three based in
$1 = €0.68
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